$A stays near multi-month lows

The Australian dollar bounced off recent lows after steep losses in the past couple of sessions but analysts see further downside for the two currencies as investors flee to safe havens such as bonds and yen.

The Australian dollar held at $0.7275, up from an 18-month trough of $0.7251 touched on Monday.

The New Zealand dollar was last up 0.2 per cent at $0.6590 after going as deep as $0.6558 on Monday, a level not seen since early 2016.

Both currencies have plunged more than seven per cent so far this year - hit by a meltdown in the Turkish lira following Turkey's diplomatic rift with the United States late last week.

The sell-off in the lira rattled financial markets and knocked the euro, South Africa's rand and Mexico's peso.

The Aussie, which is often played as a liquid proxy for emerging market growth, got a beating too.

It stumbled 1.4 per cent last week, clocking its worst performance since mid-June.

The kiwi in particular was brought lower by a dovish Reserve Bank of New Zealand (RBNZ) which left the door ajar for a rate cut at its policy meeting on Thursday while signalling rates are on hold for the foreseeable future.

The kiwi skidded 2.6 per cent last week while short-term bond yields tumbled to record lows.

Overall sentiment for the Australasian currencies remains bearish.

"Even though both the Australian and New Zealand dollars... have pretty much hit our end-year forecasts, the risks still lie on the downside," said Paul Dales, Sydney-based chief economist at Capital Economics.

"Looking ahead, there is less scope for expected interest rate differentials to weaken the Aussie and kiwi further, although more downward pressure could come from a fall in commodity prices if GDP growth in China eases further."

The Australian and New Zealand economies are both heavily exposed to China, a top buyer of their produce.

"And although we aren't expecting a major escalation of the trade war or Turkey's crisis to spread, one or both events would presumably send the Aussie and kiwi much lower," Mr Dales said.